On August 25, Auditor General Eugene DePasquale said his latest audit shows that a faulty Charter School Law and the Pennsylvania Department of Education’s (PDE) protracted, inconsistent, confusing, and conflicting process for handling charter school payment challenges may unfairly favor charter schools over school districts.

Under the Charter School Law, charter schools receive funding from school districts based on a formula for both non-special education and special education students. If the school district fails to make a monthly payment to a charter school, the charter school sends an invoice to PDE and the department directly pays the charter school and deducts the amount from the school district’s state subsidy.

School districts may object for a variety of reasons, including questioning charges for students not residing in the school district or the number of days that the charter school claims to have educated a student.

Auditors noted that even though PDE notifies a school district that it has 30 days to challenge a redirection payment request, in most cases the department does not wait the 30 days before authorizing the payment to the charter school.

Auditors found that there were 857 charter school payment appeals filed by districts during the five-year audit period of January 2011 through December 2015 when PDE made more than $1 billion in direct payments to charter schools. As of Dec. 31, 2015, 701 of the appeals – or 82 percent – were unresolved, including:

• 374 appeals involving $30.5 million redirected from school districts to charter schools, and

• 327 appeals where funds were not redirected from school districts to the charter schools.

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